The Producers Affiliation of Nigeria (MAN) has warned that the proposed introduction of a Tax Stamp System for excisable items might worsen inflation, erode client demand, and weaken Nigeria’s competitiveness underneath the African Continental Free Commerce Space (AfCFTA).
In accordance with the affiliation, the additional compliance prices from tax stamps would inevitably be handed on to shoppers, lots of whom are already grappling with excessive costs for primary items.
“This may additional shrink demand and push extra folks towards cheaper, illicit options,” MAN stated in a press release signed by its Director Normal, Segun Ajayi-Kadir, on Tuesday.
The group added that the measure would increase manufacturing prices for native producers, making their merchandise much less aggressive in comparison with imports from different African nations.
Beneficial properties of the 2025 Tax Act in danger
MAN acknowledged the federal government’s efforts to modernize tax administration by the Nigeria Tax Act 2025, which consolidated a number of levies, simplified compliance, and delivered reduction to companies. However it warned that the proposed tax stamp would undermine these features by making a “hidden tax burden” that contradicts the spirit of the Act.
“The 2025 reforms have been meant to ease the price of doing enterprise and encourage funding. Introducing tax stamps dangers reversing these achievements and discouraging industrial progress,” the assertion stated.
- The producers additionally questioned the effectiveness of tax stamps in tackling smuggling and counterfeiting, which proponents usually cite as key advantages.
- MAN argued that the proof globally exhibits restricted success, with the principle beneficiaries being distributors supplying the tax stamp know-how slightly than governments or industries.
- As an alternative, the affiliation warned, tax stamps might worsen illicit commerce as larger costs drive shoppers towards unregulated markets. It additionally flagged dangers of counterfeit stamps getting into circulation, making it more durable to differentiate between real and faux merchandise.
Digital methods already in place
MAN additional identified that the federal government already operates digital platforms able to offering transparency and traceability in excise operations.
These embrace the Nigeria Customs Service’s B’Odogwu Automated Excise Register System (ERS) and the Federal Inland Income Service’s e-invoicing platform.
“These home-grown methods give authorities the real-time visibility that tax stamps promise, with out the extra prices and disruptions,” the group stated.
It warned that layering a brand new system on prime of present ones would solely create bottlenecks and enhance compliance prices.
Classes from different nations
The affiliation cited the experiences of Kenya, Uganda, Tanzania, and Ghana, the place tax stamp methods triggered authorized disputes, excessive compliance prices, and widespread business complaints. In lots of of those instances, illicit commerce persevered regardless of the extra prices to producers.
- Even in superior economies, the affiliation famous, tax stamp regimes are being reconsidered. The UK lately reformed its stamp-based system after concluding it was expensive, ineffective, and complicated for companies, a growth MAN says Nigeria ought to take critically.
- Whereas reiterating its dedication to contributing excise revenues, MAN urged the federal government to strengthen present digital instruments, border controls, and enforcement mechanisms as a substitute of introducing tax stamps.
It additionally referred to as for broad stakeholder consultations and a clear impression evaluation earlier than any remaining determination is made.
Backstory
Whereas there is no such thing as a official announcement of the tax stamps but, MAN stated it has it on good authority that the federal government is planning to introduce the coverage based mostly on the solutions of some distributors that it could assist to sort out illicit commerce.
The Affiliation famous that the Tax Stamp was first thought of by the Nigerian authorities in 2018, and it was roundly rejected by all stakeholders.
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